Panera Bread 2004 Annual Report Download - page 8

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PART I
ITEM 1. BUSINESS
GENERAL
Panera Bread Company (including its wholly owned subsidiaries) may be referred to as the “Company,” “Panera Bread” or in the
first person notation of “we,” “us,” and “ours” in the following discussion.
The Company was originally organized in March 1981 as a Massachusetts corporation under the name Au Bon Pain Co., Inc. and
reincorporated in Delaware in June 1998. Originally the Company consisted of three Au Bon Pain bakery-cafes and one cookie store.
The Company continued to grow the Au Bon Pain concept domestically, primarily on the east coast, and internationally throughout
the 1980’s and 1990’s. On December 22, 1993, the Company purchased the Saint Louis Bread Company. At the time, the Saint Louis
Bread Company consisted of 19 Company-owned and one franchised bakery-cafe primarily located in the Saint Louis, Missouri area.
In August 1998, the Company entered into a Stock Purchase Agreement to sell the Au Bon Pain Division to ABP Corporation for
$73.0 million in cash before contractual purchase price adjustments of $1.0 million. The sale was completed May 16, 1999. At that
time, the Company changed its name to Panera Bread Company. As of December 25, 2004, the Company operates, directly and
through area development agreements with 39 franchisee groups, bakery-cafes under the names Panera Bread and Saint Louis Bread
Company. The Company operates as three business segments for accounting purposes. See Note 17 of the Company’s Consolidated
Financial Statements for segment information. The Company is a Delaware corporation with its principal executive offices at 6710
Clayton Road, Richmond Heights, Missouri 63117.
As of December 25, 2004, the Company’s retail operations consist of 226 Company-owned bakery-cafes and 515 franchise-
operated bakery-cafes, all in the United States. The Company specializes in meeting consumer dining needs by providing high quality
food, including fresh baked goods, made-to-order sandwiches on freshly baked breads, soups, salads, custom roasted coffees, and
other cafe beverages, and targets suburban dwellers and workers by offering a premium specialty bakery and cafe experience with a
neighborhood emphasis.
Bakery-cafes are principally located in suburban strip mall and regional mall locations and currently operate in 35 states. The
Company’s revenues were $479.1 million, consisting of $362.1 million of bakery-cafe sales, $44.4 million of franchise royalties and
fees, and $72.6 million of fresh dough sales to franchisees. Franchisee bakery-cafe sales were $879.1 million for the fiscal year ended
December 25, 2004.
The following table sets forth certain bakery-cafe data relating to Company-owned and franchise-operated bakery-cafes:
For the Fiscal Year Ended
December 25,
2004
December 27,
2003
December 28,
2002
Number of bakery-cafes:
Company-owned:
Beginning of period ......................................................................................................... 173 132 110
Bakery-cafes opened........................................................................................................ 54 29 23
Bakery-cafes closed ......................................................................................................... — (3) (4)
Transfer to franchisee(2).................................................................................................. (2) — —
Acquired from franchisee(1)............................................................................................ 1 15 3
End of period.................................................................................................................. 226 173 132
Franchise operated:
Beginning of period ......................................................................................................... 429 346 259
Bakery-cafes opened........................................................................................................ 89 102 92
Bakery-cafes closed ......................................................................................................... (4) (4) (2)
Transfer from Company(2) .............................................................................................. 2 — —
Sold to Company(1)......................................................................................................... (1) (15) (3)
End of period.................................................................................................................. 515 429 346
System-wide:
Beginning of period ......................................................................................................... 602 478 369
Bakery-cafes opened........................................................................................................ 143 131 115
Bakery-cafes closed ......................................................................................................... (4) (7) (6)
End of period.................................................................................................................. 741 602 478
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